Challenging  Times  For  The  North  Sea  Offshore  Industry:  An  Underwriter’s  General  Update  

Bin  Wang,  Underwriter,  Norwegian  Hull  Club  

Offshore  Energy,  Builders  Risk  &  Special  Risks  

2016  Houston  Marine  Insurance  Seminar  

Monday,  19  September  2016,  Houston  TX  

e24.no/spesial/2014/feltutbygginger  21  June  2014  USD  114.88/barrel  

e24.no/spesial/2014/feltutbygginger  20  January  2016  USD  27.72/barrel  

e24.no/spesial/2014/feltutbygginger  9  September  2016  USD  48.93/barrel  

CommodiZzaZon  of  specialty  lines:  What  does  the  future  hold  for  the  marine/energy  underwriter?  

fortune.com  October  14,  2015  Top  10  disappearing  jobs  in  America  

xe.com  

Here’s  what  it  takes  to  be  a  marine/energy  underwriter  in  today’s  challenging  market:  

mariZme.no  7  January  2016  

dailymail.co.uk  21  January  2016  The  Cromarty  Firth  

A  quesZon  of  lay-­‐ups  

•  A  quesZon  of  cost  reducZon  •  The  hot  vs.  cold  lay-­‐up  •  LUUR  vs.  LUNUR  •  Challenges  on  the  lay-­‐up  return  –  One  return  does  not  fit  all  •  The  unforeseen  aggregaZon  •  The  shipyard  lay-­‐up  (lay-­‐up  slips  vs.  slow-­‐downs  in  

construcZon)  •  The  reacZvaZon  survey  vs.  lay-­‐up  plan  

Hot  or  cold?  

•  Hot  lay-­‐up    The  machinery  is  kept  in  operaZon  for  the  sake  of  fast  re-­‐commissioning  

  Measures  may  be  taken  to  reduce  various  operaZonal  costs  

  Lay-­‐up  Zme  is  usually  less  than  12  months  and  relevant  cargo  may  be  kept  on  board  

•  Cold  lay-­‐up    The  machinery  is  taken  out  of  service  and  the  unit  is  kept  “electrically  dead,”  with  the  

excepZon  of  emergency  power    Lay-­‐up  Zme  is  usually  more  than  12  months  and  manning  is  reduced  

•  Does  a  hot  lay-­‐up  become  “cold”  at  some  point  in  Zme?    When?    What  are  the  criteria?    Class  maintained?  

•  When  is  a  third-­‐party  lay-­‐up  plan/lay-­‐up  MWS  necessary/prudent?  (NMIP  2016,  Cl.  3-­‐25/26)    Rule  of  thumb:  If  asking  for  a  lay-­‐up  return,  should  have  a  lay-­‐up  plan!  

Guidelines  for  lay-­‐up  

DNV GL •  Lay-up site •  Mooring arrangements •  Ballasting •  Power availability •  Safety precautions

-  Manning -  Explosions and fire -  Flooding -  Communication -  Navigation -  Lifesaving equipment

•  Anti-pollution measures •  Security •  Stability •  Preservation

-  Hull -  Engine and boiler rooms -  Machinery -  Boilers and steam systems -  Electrical installation -  Instrumentation and automation

•  ISM and ISPS certification •  Re-commissioning

ABS •  Lay-up procedure

requirements - Requirements regarding fire, communication, power, drains, valves, mooring etc.

•  Preservation and maintenance

-  Hull and deck equipment -  Machinery -  Boilers -  Electrical Installation -  Elevating and skidding systems -  Control Systems -  Drilling Equipment -  Lay-up location and mooring -  Cranes -  Documentation and Certificates

•  ISM and ISPS certification •  Reactivation

Lloyd’s Register •  Location considerations •  Mooring arrangements •  Manning levels •  Record keeping •  Navigation •  Safety equipment, systems

and alarms •  Protection during lay-up

-  Ballast tanks -  External hull protection -  Internal hull protection -  Deck equipment -  Accommodation -  Outfitting -  Machinery -  Steam plant -  Water systems -  Propeller and shafting

•  ISM and ISPS certification

The  shipyard  lay-­‐up:  An  underwriter’s  view:  

As  a  lay-­‐up  facility  

•  Lay-­‐up  plan/third-­‐party  MWS?  

•  Class?    Local  rules/regulaZons?  

•  PreservaZon?  

•  Security?    Manning?  •  Fire  risk?    Water-­‐Zght  integrity?  

•  Any  (minor)  works?    Contractors?  

•  LocaZon?    Nat  Cat  risk?    Mooring?    Sea-­‐floor?  

•  Hot  or  cold?  

•  How  long?  •  ReacZvaZon  requirements?  

•  H&M  lay-­‐up?    Port  risks?  

•  Annual  Survey?  

As  a  BAR  extension  

•  Slow-­‐down  in  ConstrucZon?    Yay!    Extension  premium!  

More  thoughts  about  lay-­‐ups:  

•  The  lay-­‐up  return    How  can  underwriters  price  the  return  in  view  of  the  so  many  different  types  of  lay-­‐ups  

possible  today?  

•  AggregaZon    Super  yachts  in  Monaco  

  Careful  monitoring  of  E&P  GoM  NWS  aggregaZon  

  What  about  the  Norwegian  nords?    The  Cromarty  Firth?  

•  Workforce  cuts/re-­‐organizaZon  –  Increased  risk?  •  Theory  

  Nordic  Plan  historically  emphasized  technical  monitoring  of  the  entry  into  lay-­‐up  (NMIP  2016,  Cl.  3-­‐25/26,  lay-­‐up  plan,  etc.)  

  Today,  increased  focus  on  re-­‐acZvaZon  requirements  is  necessary  

  Rigs  are  now  entering  into  unprecedented  duraZons  in  lay-­‐up.    What  are  the  risks?    Do  we  need  to  update  industry-­‐wide  definiZons/standards?    CEFOR?    JRC?    Class?  

  How  many  of  these  rigs  will  work  again?  

Relevant  Quay-­‐Side  Incidents  

offshoreenergytoday.com  31  May  2013  

gcaptain.com  28  December  2013  

Lay-­‐up  incident  1  (DOL  2  June  2016)  

•  Semi-­‐sub  cold  stacked  and  resZng  on  seabed  

•  2  drillships  broke  moorings,  driped  and  1  collided  with  the  semi-­‐sub  

•  Minor  damage,  no  breach  of  hull  or  impact  on  water  integrity  

Damage  of  U-­‐Light  (A1  –  Stbd)  

Damage  of  Ver9cal  frame  and  its  bracings.  Steering  room  (A1  –  Stbd)  

Lay-­‐up  incident  2  (DOL  9  July  2016)  

•  Semi-­‐sub  cold  stacked  and  resZng  on  seabed  

•  Monthly  inspecZon  revealed  that  a  pump  room  had  flooded  

•  Leaking  sea  chest  valve  caused  water  ingress